IBM acquires deep learning startup AlchemyAPI

So much for AlchemyAPI CEO Elliot Turner’s statement that his company is not for sale. IBM has bought the Denver-based deep learning startup that delivers a wide variety of text analysis and image recognition capabilities via API.

IBM plans to integrate AlchemyAPI’s technology into the core Watson cognitive computing platform. IBM will also use AlchemyAPI’s technology to expand its set of Watson cloud APIs that let developers infuse their web and mobile applications with artificial intelligence. Eventually, the AlchemyAPI service will shut down as the capabilities are folded into the IBM Bluemix platform, said IBM Watson Group vice president and CMO Stephen Gold said.

Compared with Watson’s primary ability to draw connections and learn from analyzing textual data, AlchemyAPI excels at analyzing text for sentiment, category and keywords, and for recognizing objects and faces in images. Gold called the two platforms “a leather shoe fit” in terms of how well they complement each other. Apart from the APIs, he said AlchemyAPI’s expertise in unsupervised and semi-supervised learning systems (that is, little human oversight over model creation) will be a good addition to the IBM team.

We will discuss the burgeoning field of new artificial intelligence applications at our Structure Data conference later this month in New York, as well as at our inaugural Structure Intelligence event in September.

I have written before that cloud computing will be the key to IBM deriving the types of profits it wants to from Watson, as cloud developers are the new growth area for technology vendors. Cloud developers might not result in multi-million-dollar deals, but they represent a huge user base in aggregate and, more importantly, can demonstrate the capabilities of a platform like Watson probably better than IBM itself can. AlchemyAPI already has more than 40,000 developers on its platform.

Other companies delivering some degree of artificial intelligence and deep learning via the cloud, and sometimes via API, include Microsoft, Google, MetaMind, Clarifai and Expect Labs.

AlchemyAPI’s Turner said his company decided to join IBM, after spurning numerous acquisition offers and stating it wasn’t for sale, in part because it represents an opportunity to “throw rocket fuel on” the company’s long-term goals. Had the plan been to buy AlchemyAPI, kill its service and fold the team into research roles — like what happens with so many other acquisitions of deep learning talent — it probably would not have happened.

Gold added that IBM is not only keeping the AlchemyAPI services alive (albeit as part of the Bluemix platform) but also plans to use the company’s Denver headquarters as the starting point of an AI and deep learning hub in the city.

Update: This post was updated at 9:10 a.m. to include quotes and information from Elliot Turner and Stephen Gold.

Financial terms of the deal were not disclosed. However, IBM said it has set aside $100m (Â£66m) for investments in cognitive app startups – part of the $1bn (Â£655m) it is investing in the “Watson as a cloud” unit.